Kotak Mahindra Bank's private banking unit likely to add thousands of new clients

India’s booming wealth market has seen competition intensify, with global banks from HSBC Holdings Plc to Julius Baer Group ramping up their presence

Kotak Mahindra Bank Ltd.’s private banking unit expects to add thousands of new families to its portfolio, as it seeks to scale up to fight falling margins in India’s growing wealth management industry.

The billionaire Uday Kotak-backed division added 2,280 new families to its client base in private banking in the year ending March 2024, more than three times the 711 new families it added a year earlier, according to its annual reports. Kotak Mahindra Bank is one of India’s top wealth managers.

“We expect to maintain the same pace of acquisitions as the previous year,” Vodhi Chakravartty, head of strategy at Kotak Private Banking, said on Wednesday. Chief Executive Officer Oisharya Das said the private bank’s assets under management grew by over 30% last year. The firm says it provides services to 60% of India’s top 100 families.

“It’s a falling margin business and one will really have to build scale,” said Das, adding that technology would be a key differentiator for the unit.

India’s booming wealth market has seen competition intensify, with global banks from HSBC Holdings Plc to Julius Baer Group ramping up their presence, while Standard Chartered Plc is expanding into smaller towns. UBS Group AG is in advanced talks with India’s 360 One WAM Ltd. for a deal that will turbo-charge the Swiss bank’s exposure to the country.

Kotak Private caters to wealthy Indians with more than have more than $1 million of investable assets as well as to ultra-high networth individuals with over $30 million. Kotak Mahindra Bank had assets under management of 8.86 trillion rupees ($103 billion) in private banking, priority banking and investment advisory divisions as of Dec. 31, 2024.

India’s wealth market has surged in recent years, driven by strong economic growth, a booming stock market, exits from businesses and rising salaries. The country had 283,000 wealthy individuals with over $5 million in assets that were collectively worth 232 trillion rupees ($2.7 trillion) in 2023, according to a report released on Wednesday by Kotak Private. That’s expected to jump by 52% to 430,000 individuals with 359 trillion rupees in assets by 2028, the report said.

Das said the private bank plans to expand in smaller cities as well as tap the Indian diaspora that is keen to invest in the country’s assets. “We are looking at more hiring in select pockets where we see that there are gaps - tier two, tier three cities where we see a growth in business.”